July 7, 2006

The high cost of the magic word, or Buying a nickle for a dime

Next time some politician or booster keeps spouting the magic word "jobs" in your face to make it seem as if their latest effort to grease the skids for corporate interests is going to help the "little guy", think again.

They're determined efforts ramming through whatever multi-million dollar deal their new corporate best friends want is sucking real money out of your pockets harder than an Oreck on a bowling ball.

Incalculable millions of potential and real tax revenue is forfeited with the stroke of a pen and smiles and hand shakes all around as the press dutifully records the latest massive giveaway of money the people of the state and locality have a right and a duty to collect.

Money which will have to be made up by digging deeper into the pockets of the very "working families" who, these politicians constantly assure us, are whose interests they're looking out for. It's all for the average working guy that they roll over on their backs for big money, acting like the class dweeb in some hormonal frenzy towards the hottest cheerleader in the school, with no self respect, and not only willing, but eager to agree to anything, damn the consequences or even if they'll ever get what they fervently hope they might.

Earlier this year, Georgia Governor Sonny Perdue offered an astounding $400 million in incentives to Kia, the Korean automaker, to develop a plant that would employ 2,500 Georgians. Each of those jobs came with a $160,000 price tag. But it was nothing compared with what Mississippi was reportedly willing to offer the Korean car company: $1 billion in incentives, or roughly $400,000 per new job created.

In Perdue’s defense, Georgia had recently lost two American auto plants. Even cosmetic economic development probably looked better than doing nothing.

But what is truly unfortunate is that Perdue is not alone. When states across the country eye strategies for economic development, too many of them turn to an old idea: tax breaks for big companies who bring in a couple hundred jobs.

These companies literally receive billions of dollars in taxpayer money. Who are the targets of this largesse? As a Good Jobs First study noted recently, one of the biggest recipients is Wal-Mart—the company famous for its ability to undercut wages and local businesses has received well over $1 billion in financial assistance.

And while the corporate corruption of the federal government is well-known, the implications of the growing set of corporate tax loopholes at the state level is less commonly addressed.

The implications of these shifts are clear. Citizens for Tax Justice reports that corporations manage to shield as much as two-thirds of their profits from state corporate income taxes. The result: money that could be spent on real economic development opportunities flows instead into the pockets of executives and the bill gets passed along to small taxpayers—local businesses and workers.

These types of tax breaks are often described as “tax expenditures” because they more closely resemble government programs than true tax reform. Yet, unlike most government programs, tax expenditures often operate as implicit entitlement programs—there is no limit on how high the costs can go, no annual appropriations system and generally little legislative oversight. Even worse, there is no accountability of results. The companies file a tax return, claim the credit and never need defend the benefits produced by the tax provisions.

How can this be considered anything less than corporate theft of the public's money on a massive scale? Incentives, sure. But how much is too much? The line was crossed long ago. And why is this theft almost never looked into and scrutinized in the press?

To it's credit (atta boy, Rod), the State of Illinois has a website which allows even peons like myself to at least try our hand at looking up how much state largesse has been doled out and in what amounts, to which corporations, as well as what agreements were made, and how well they're living up to their end of the deal.

But the state program under which Triumph received their hunk of dough doesn't appear to be one of those included in these reports.

The Center for Tax Justice provides some rather shocking facts and figures regarding how corporations are stiffing states out of income tax on a mind boggling scale. Just imagine what even a portion of the nearly 42 BILLION dollars in state taxes owed but not paid by corporations over a three year period could do for strapped state budgets.

State income taxes paid by corporations have dropped precipitously in the recent past, though Illiniois again fares well in this category with only Florida and New Jersey showing a smaller decline in corporate income tax revenue.

About Me

NOTE:

Due to the fact that the foolish and the disturbed will always be among us,

COMMENTS ON THIS SITE ARE MODERATED

Your comments may not show up immediately.
~~~~~~~~~~~~~~~~~~~
You do not have a RIGHT to have your comments published here, they will appear at the editor's sole discretion.

Readers are strongly encouraged to send along any tid-bits, story ideas, event notices, links to articles, background info, or other stuff they feel may be of interest. Just contact me at the link below. It's a lot easier than throwing it through my window tied to a rock.